A co-management agreement between a hospital and a physician group is an increasing trend among ambulatory surgery centers (ASCs). A hospital will essentially buy out the physician’s ownership at fair market value and will in turn utilize and engage the physician group to oversee and manage the surgery center.

One of the main goals in entering a co-management agreement is to improve the quality of the services provided to patients. In these types of arrangements, physicians are not salaried employees. However, they are paid at a “predetermined” base compensation and can often earn incentive bonuses on top of their base pay for reaching quality benchmarks. Hospitals also benefit by experiencing cost savings and being able to provide better services to their patients resulting in increased patient satisfaction.

Some issues that should be considered before entering a co-management agreement include making sure that physicians are aware of the scope of their new management tasks and that they must maintain an active leadership role within the ASC. Also, quality controls need to be set in place along with ensuring financial sustainability before entering into such an agreement.

About the AuthorNikki Halteman is a member of Katz, Sapper & Miller’s Healthcare Resources Group. Nikki has experience in business and personal tax planning and compliance as well as financial statement compilation and analysis. Connect with her on LinkedIn.